Pound US Dollar (GBP USD) Surges on Disappointing NFP Print

Modified: Friday, 1 September 2017 16:35 BST - Written by Ben Hughes

STORY LINK Pound US Dollar (GBP USD) Surges on Disappointing NFP Print

The Pound to US Dollar exchange rate surged to a two-week high this afternoon in the wake of a disappointing US jobs report.

The headline report on non-farm payrolls demonstrated an increase of 156,000in August, significantly lower than the downwardly revised 189,000 in July and indeed lower than market expectations of some 180,000.

Job gains that did occur were predominantly within manufacturing, construction, mining, health care and other professional and technical services.

In other employment news, the unemployment rate also disappointingly inched higher, printing at 4.4% against the 4.3% that was expected.

These figures quickly resulted in the ‘Greenback’ weakening across the board and allowed for Sterling (temporarily bolstered by a positive PMI release) to capitalise.

UK Markit Manufacturing PMI Proves Positive, GBP Bolstered

Today’s UK Markit manufacturing PMI beat all expectations by printing at a four-month high of 56.9 in August, up from the previous period’s 55.3.

The report also detailed that the pace of production experienced its steepest rise in seven months, a leap afforded by growth in employment and new work received.

Beyond this, business optimism within the sector also hit three-month highs and input cost inflation woke up from its seven-month slumber and finally expressed growth.

This news helped divert market attention away from the ongoing negativity surrounding Brexit negotiations, particularly the news that this week’s round offered no great signs of progress. Indeed, the current contention is that London insists on discussing aspects of trade, whilst the EU Commission refuse to budge until elements of the divorce bill are finalised ‘to a satisfactory degree’.

Understandably both sides remaining stubborn in this regard has resulted in stagnation, causing markets to become increasingly worried that the Brexit deadline will be reached without new policy thoroughly outlined.

GBP USD Forecast: Volatility on Big Data Next Week

The Pound to US Dollar exchange rate may remain volatile next week in the wake of notable Markit/ISM data releases for both nations.

The UK will receive its Markit composite and services releases for August towards the start of the week before finishing with a bang on Friday with the industrial production, manufacturing production and construction output figures for July, along with the notable trade balance readings.

The United States will be due its fair share of Markit releases, along with factory orders and durable goods orders for July (keep an eye out for Federal Reserve official Kaplan’s speech in Dallas on Tuesday, also). As the week progresses the US Markit ISM services/non-manufacturing composite reading for August will be released, a figure that is currently predicted to beat July’s 53.9 by printing at 55.

Markits will also be carefully watching for news regarding the amount of damage caused to the US and the energy sector as a whole by Storm Harvey, especially regarding the amount of time that US refineries may be out of action and the corresponding effect it might have on the industry.

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TAGS: Pound Dollar Forecasts